The share of U.S. mortgages that are seriously delinquent fell to a five-year low as job gains help borrowers keep up on payments while rising home prices enable others to sell.
The percentage of home loans that were more than 90 days behind or in the foreclosure process fell to 5.65 percent in the third quarter from 7.03 percent a year earlier, the Mortgage Bankers Association said in a report today. That was the lowest rate since the third quarter of 2008, when it was 5.17 percent.
Fewer Americans are falling behind on their payments as the economy stabilizes and property values rise across the country. The jobless rate in September fell to 7.2 percent, the lowest since November 2008. The median U.S. home price rose 12.5 percent in the third quarter from a year earlier, the National Association of Realtors said yesterday. Cities hurt worst by the foreclosure crisis, such as Las Vegas, Atlanta and Sacramento, California, had the biggest increases.
"The speed of the decline in the foreclosure rate is faster than I anticipated," Michael Fratantoni, the Mortgage Bankers Association s vice president for research and economics, said in a telephone interview today from Washington. "The strength of the housing recovery is benefiting the distressed portion of the market, clearing it up more quickly."
The serious-delinquency rate is a gauge of shadow inventory, or homes likely to end up on the market after seizure by banks. The percentage of loans in the foreclosure process at the end of the third quarter was 3.08 percent, the lowest since 2008 and down from 4.07 percent a year earlier.
About 77 percent of loans that are seriously delinquent were originated in 2007 or earlier, said Jay Brinkmann, the Mortgage Bankers Association's chief economist.
"There were major drops across the board," Brinkmann said in a telephone interview today from Washington. "It really speaks to the higher-quality loans that were made more recently. And we're managing to work through the problems of the past."
While delinquencies and foreclosures are returning to normal in much of the country, states such as New Jersey, New York and Connecticut, which require court approval for home seizures, are lagging behind. New Jersey led the nation in the increase in the percentage of foreclosure actions filed. The state's share of loans in foreclosure climbed to 8.28 percent from 8.01 percent in the second quarter.
In Florida, a judicial state, 12.6 percent of loans were seriously delinquent, the highest level in the nation. It was followed by New Jersey at 12.1 percent and New York at 9.3 percent.
For judicial states, the average rate of loans in foreclosure was 5.28 percent, compared with 1.66 percent in nonjudicial states.